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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10 - QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarter Ended Commission File Number 0-12370
January 31, 1995
SI TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 95-3381440
- -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
4611 South 134th Place, Seattle, Washington 98168
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(Address of principal executive offices) (Zip Code)
(206) 244-6100
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Registrant's telephone number, including area code
STRUCTURAL INSTRUMENTATION, INC.
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(Former name if changed since last report.)
SAME
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(Former address and former fiscal year, if changed since last report.)
Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
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(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date. 2,347,240 shares of
Common Stock, par value $.01 on March 8, 1995.
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SI TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JANUARY 31, 1996 JULY 31, 1995
(UNAUDITED)
---------------------------------
<S> <C> <C>
Current assets:
Cash $ 2,054 $ 540,044
Trade accounts receivable, less allowance for doubtful
accounts of $219,543 and $154,454 respectively 2,030,463 1,404,791
Inventories 1,422,744 926,088
Deferred tax asset 400,500 318,900
Other current assets 63,305 72,255
---------------------------------
Total current assets 3,919,066 3,262,078
Property and equipment, less accumulated depreciation and
amortization 725,836 550,559
Other assets:
Intangible assets, net 2,829,689 2,874,881
Other 90,844 59,550
---------------------------------
TOTAL ASSETS $ 7,565,475 $ 6,747,068
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt $ 183,876 $ 257,364
Put option obligation - current 325,000 --
Trade accounts payable 899,100 496,225
Income taxes payable 247,191 260,991
Accrued liabilities 1,025,508 882,306
---------------------------------
Total current liabilities 2,680,675 1,896,886
Long-term debt, less current maturities 13,041 53,729
Put option liability, less current maturities 60,000 385,000
Deferred taxes 22,200 22,200
Stockholders' Equity:
Common stock, par value $.01 per share; authorized, 5,000,000 shares;
issued and outstanding, 2,347,240 shares 23,472 23,472
Additional paid-in capital 4,769,268 4,769,268
Deficit in retained earnings (3,181) (403,487)
---------------------------------
Total stockholders' equity 4,789,559 4,389,253
---------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,565,475 $ 6,747,068
=================================
</TABLE>
See notes to consolidated financial statements
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SI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JANUARY 31 JANUARY 31
1996 1995 1996 1995
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net sales $ 3,125,013 $ 3,039,663 $ 5,826,036 $ 5,082,073
Cost of sales 1,667,941 1,554,076 3,068,632 2,608,898
--------------------------- ---------------------------
Gross profit 1,457,072 1,485,587 2,757,404 2,473,175
Operating expenses:
Selling, service, general and administrative 841,095 938,905 1,626,901 1,618,779
Research, development and engineering 226,912 215,344 441,607 353,098
Amortization of intangibles 22,596 37,618 45,192 75,236
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Total operating expenses 1,090,603 1,191,867 2,113,700 2,047,113
--------------------------- ---------------------------
Earnings from operations 366,469 293,720 643,704 426,061
Interest expense (17,828) (41,137) (36,205) (73,555)
Other income (expense), net 8,117 (17,958) 36,507 (2,507)
--------------------------- ---------------------------
Net earnings before income taxes 356,758 234,626 644,006 349,999
Income tax expense (133,700) (48,600) (243,700) (73,600)
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Net earnings $ 223,058 $ 186,026 $ 400,306 $ 276,399
=========================== ===========================
Net earnings per common and
common equivalent share $ .09 $ .08 $ .16 $ .11
=========================== ===========================
Weighted average shares outstanding 2,434,236 2,469,263 2,432,725 2,442,950
</TABLE>
See notes to consolidated financial statements
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<PAGE> 4
SI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JANUARY 31
1996 1995
-----------------------
<S> <C> <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
Net earnings $ 400,306 $ 276,399
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 154,543 149,693
Deferred income taxes (81,600) (65,000)
Changes in operating assets and liabilities:
Trade accounts receivable (625,672) (627,556)
Inventories (496,656) 229,898
Other current assets 8,950 67,427
Trade accounts payable 402,875 62,113
Accrued liabilities 143,202 329,698
Income taxes payable (13,800) 113,200
-----------------------
Net cash provided (used) by operating activities (107,852) 535,872
Cash flows from investing activities:
Proceeds from sale of equipment 487 915
Purchase of equipment (316,449) (56,442)
-----------------------
Net cash used in investing activities (315,962) (55,527)
Cash flows from financing activities:
Payments on notes payable to bank -- (151,095)
Proceeds from (payments on) long term debt (114,176) 50,181
Payments on put option obligations -- (209,700)
Purchase of common stock -- (159,500)
-----------------------
Net cash used in financing activities (114,176) (470,114)
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Net increase (decrease) in cash (537,990) 10,231
Cash at beginning of period 540,044 17,341
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Cash at end of period $ 2,054 $ 27,572
=======================
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 36,205 $ 184,975
Income taxes 339,100 23,800
</TABLE>
See notes to consolidated financial statements
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SI TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. FINANCIAL STATEMENTS
In February, 1996 the company changed its name to SI Technologies, Inc. from
Structural Instrumentation, Inc.
The following unaudited consolidated financial statements of the Company and its
subsidiary have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the entire fiscal year ending July 31, 1996. This
form 10-QSB should be read in conjunction with the Annual Report and form 10-KSB
for the year ended July 31, 1995.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-out basis) or
market and consisted of the following at:
<TABLE>
<CAPTION>
JANUARY 31, 1996 JULY 31, 1995
(UNAUDITED)
<S> <C> <C>
Raw Materials $ 662,435 $ 413,052
Work in Progress 302,935 192,292
Finished Goods 632,730 455,174
------------------------------
1,598,100 1,060,518
Less allowance for obsolescence 175,356 134,430
==============================
$1,422,744 $ 926,088
==============================
</TABLE>
NOTE 3. EARNINGS PER SHARE
Net earnings per share of common stock is based on the weighted average number
of common shares and common stock equivalents outstanding during the period.
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<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
SI Technologies, Inc. (formerly Structural Instrumentation, Inc.) - SI -
manufactures mobile and stationary weighing systems for the transportation
industry, vehicle fleet information systems and force measurement devices.
The three general types of electronic weighing systems include: on-board
weighing systems installed in the frame or suspension system of a vehicle,
semi-permanent industrial axle scales, and portable platform scales used both by
weight enforcement agencies and general transportation companies.
Fleet information systems are made up of on-board vehicle and base operation
computer hardware and software that collect and report operating information
used to manage and improve the performance of fleet operations. Specific
benefits from system utilization include increased driver and truck efficiency,
reduced maintenance costs, better safety records, reduced manual report
generation and improved customer service.
Force measurement devices are electromechanical components that convert a
physical force to an electrical signal. When matched with microprocessor
controlled digital electronics, force measurement devices measure forces such as
pressure, weight, mass and torque. Commercially, force measurement devices are
used in electronic scales and a wide range of machinery and equipment.
RESULTS OF OPERATIONS
Sales
Net sales increased to $3,125,013 for the quarter ended January 31, 1996
from $3,039,663 for the same period last year. This is an increase of
$85,350 or 3% over the prior year's second quarter results. Net sales for
the six month period ending January 31, 1996 were $5,826,036 compared to
$5,082,073 in the same period of fiscal 1995. This is an increase of
$743,963 or 15% over the prior year's first six months.
The second quarter sales increase is the result of very strong sales in the
U.S. forestry market, a continuation of the company's growth in the US
waste market and increasing sales to international markets outside of
Canada. Sales to Canadian customers decreased as compared to the second
quarter of last year. The reduced activity in the Canadian market reflects
the slowing of their pulp industry after a period of very rapid growth.
Gross Profit
Gross profit for the quarter was $1,457,072 compared to $1,485,587 in the
second quarter last year. This is a decrease of $28,515. Gross profit for
the six month period ending January 31, 1996 was $2,757,404 compared to
$2,473,175 in the same period of fiscal 1995. This is an increase of
$284,229 or 11%. Gross profit as a percentage of sales decreased in the
second quarter and for the six month period ending January 31, 1996 to 47%
as compared to the 49% recorded in both the second quarter and first six
months of last year.
The decline in gross margin reflects increased costs associated with
manufacturing startup expenses incurred for new products introduced during
the second quarter of fiscal 1996 and reduced selling margins related to
entry into new markets.
Selling, General and Administrative Expenses
SG & A expenses decreased to $841,095 for the quarter ended January 31,
1996 from $938,905 for the same period last year. This is a decrease of
$97,810 or 10% over the prior year's second quarter. SG & A expenses as a
percentage of revenue decreased to 27% down from 31% in the same quarter of
last year. SG & A expenses for the six month period ending January 31, 1996
were $1,626,901 as compared to $1,618,779 in the same period of fiscal
1995. This is an increase of $8,122, a change of less than 1% from the same
six months of fiscal 1995. For the six month period, SG & A expenses as a
percentage of revenue were 28% as compared to 32% during the first six
months of last fiscal year.
The changes in SG & A expenses reflect higher expenditures relating to
additions to the company's sales force which have been offset by lower fees
for professional services.
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<PAGE> 7
Research and Development and Engineering Expenses
RD & E expenditures increased to $226,912 for the quarter ended January 31,
1996 from $215,344 for the same period last year. This is an increase of
$11,568 or 5% over the prior year's second quarter. RD & E expenses as a
percentage of revenues were 7% in both the second quarter of 1996 and the
same quarter of last year. RD & E expenditures were $441,607 for the six
month period ending January 31, 1996 as compared to $353,098 in the same
period of fiscal 1995. This is an increase of $88,509 or 25% over the prior
year's six month period. The higher spending reflects a higher rate of
investment in new product development as well as increased product
extensions for existing product lines. The Company expects to continue its
aggressive product development program into the near term.
Intangibles
The amortization of intangibles decreased to $22,596 for the quarter ended
January 31, 1996 from $37,618 for the same period last year. This is a
decrease of $15,022 or 40% from the prior year's first quarter. For the six
month period ending January 31, 1996 amortization of intangibles was
$45,192 as compared to $75,236 in the same period of last fiscal year. This
is a decrease of $30,044 or 40% from the prior year's six month period. The
lower expense reflects the completion of amortization for non-compete
agreements associated with an acquisition.
Interest Expense and Other Income/Expense
Interest expense decreased to $17,828 for the quarter ended January 31,
1996 from $41,137 for the same period last year. This is a decrease of
$23,309 or 57% from the prior year's second quarter. For the six month
period ending January 31, 1996 interest expense was $36,205 as compared to
$73,555 in the same period of last fiscal year. This is a decrease of
$37,350 or 51% from the prior year's six month period. The lower interest
expense is the direct result of reduced borrowings by the company.
Other income was $8,117 in the second quarter. This compares to an expense
of $17,958 recorded in the second quarter of last year. This is a change of
$26,075 from the prior year's second quarter. Other income for the six
month period ending January 31, 1996 was $36,507. This compares to an
expense of $2,507 in the first six months of last fiscal year.
Income Tax Expense
Income tax expense increased to $133,700 for the quarter ended January 31,
1996 from $48,600 for the same period last year. This is an increase of
$85,100 from the prior year's second quarter. For the six month period
ending January 31, 1996 income tax expense was $243,700 as compared to
$73,600 in the same period of last fiscal year. This is an increase of
$170,100. The increased expense reflects the higher pretax income recorded
in the current quarter and a higher effective tax rate.
The effective tax rate for the second quarter and six month period ended
January 31, 1996 increased from the same periods last year due to the full
utilization of tax credits now consumed. The effective tax rate for the
quarter and six month period exceeds the U.S. federal corporate income tax
rate of 34% due to the amortization of intangible assets which expenses are
not deductible for income tax purposes and due to state income taxes.
INFLATION
Historically, the impact of inflation has been negligible, as the Company has
been able to offset the effects through efficiency and price increases.
LIQUIDITY AND CAPITAL RESOURCES
The Company's line of credit of $2,000,000 that matured November 29, 1995, was
renewed with U.S. Bank of Washington effective November 30, 1995. The new line
of credit was renewed for $2,000,000 and is for a two year term. The new
agreement included more favorable terms for the company than the prior
agreement. As of January 31, 1996 the Company had borrowings of $13,041 under
the line of credit.
The Company believes cash flow from operations and the funds available under its
bank facility will be sufficient to meet the Company's working capital needs.
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<PAGE> 8
PART II. OTHER INFORMATION
EXHIBITS AND REPORTS AND FORM 8-K
(a) Exhibits to Part II
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter.
The items omitted are either inapplicable or are items to which the answer is
negative.
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<PAGE> 9
SI TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SI TECHNOLOGIES, INC.
March 12, 1996 /s/ Rick A. Beets
-----------------------------------
Rick A. Beets
President, CEO & CFO
(Principal Executive & Financial Officer)
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9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 2,054
<SECURITIES> 0
<RECEIVABLES> 2,030,463
<ALLOWANCES> 219,543
<INVENTORY> 1,422,744
<CURRENT-ASSETS> 3,919,066
<PP&E> 725,836
<DEPRECIATION> 1,193,863
<TOTAL-ASSETS> 7,565,475
<CURRENT-LIABILITIES> 2,680,675
<BONDS> 73,041
0
0
<COMMON> 23,472
<OTHER-SE> 4,766,087
<TOTAL-LIABILITY-AND-EQUITY> 7,565,475
<SALES> 5,826,036
<TOTAL-REVENUES> 5,826,036
<CGS> 3,068,632
<TOTAL-COSTS> 3,068,632
<OTHER-EXPENSES> 2,113,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,205
<INCOME-PRETAX> 644,006
<INCOME-TAX> 243,700
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 400,306
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
